Washington (Platts)--31May2007

An increase in the amount of US natural gas storage capacity since 2006
is one of the factors supporting relatively strong gas prices despite bearish
near-term fundamentals as utilities and local distribution companies come
under increasing pressure to fill inventories this summer, analysts said.

     Andrew Weissman, senior market analyst with FTI Consulting, estimated the
US has boosted overall storage capacity over 2006 by 74 Bcf. Coupled with an
end-of-winter storage deficit compared with 2006, Weissman said local
distribution companies and utilities will need to inject between 300 Bcf and
350 Bcf more gas throughout the injection season to achieve storage refill
targets.

     "Because of continuing concerns regarding the potential for winter price
spikes and the resulting pricing of the winter-month [NYMEX] futures
contracts, LDCs and marketers are likely to fully utilize this available
storage capacity between now and the end of the injection season in
mid-to-late October," Weissman said in a recent report.

     In order to reach "full" storage, Weissman said gas distribution
utilities, particularly in consuming regions, have ramped up their purchases
for planned storage injections dramatically, offsetting the impact of lower
weather-related demand on price.

     But when it comes to new capacity expected to come on stream over 2007,
the new facilities or expansions are generally spread throughout the country,
thus keeping any one region from shouldering the bulk of incremental injection
capacity, Weissman said.

     "What's happening in the market is that planned injections into storage
have to be 1.5 to 1.75 Bcf/d higher [compared with the 2006 injection season]
in order to fill up storage capacity," Weissman told Platts.

     And incremental storage capacity will only continue to rise in the coming
years as new facilities are needed to accommodate increasing imports of
liquefied natural gas, analysts said.

		--Jessica Marron, Jessica_marron@platts.com